Do American Police Need Free Market Competition?

Recent incidents, such as the Michael Brown and Eric Garner case, have focused attention on the inefficiency and prejudices of law enforcement agencies. In response, a number of commentators have termed this a libertarian moment and made a case for services that compete with police.

The economic case for competition is a sound one: The police department, much like the rest of the government, is a monopoly. There is no competition and, therefore, the law enforcement department lacks incentive to improve performance or services. Unshackling the police force’s monopoly will spur competition and, consequently, better services for customers.

This has been the case in other industries, which have benefited from privatization. For example, privatization of intercity travel has resulted in multiple competing services for customers. Customers willing to pay a premium have the option of numerous luxury and economy choices. Then there is Greyhound, which has the oldest and most extensive intercity network.

But the case for privatizing law enforcement is complicated. This is because it is not a consumer good. It is a service provided by the government. As a result, there are a number of legal and moral tangles involved.

First, the legal framework and scope of a private security agency’s operations is limited. The agencies can share intelligence and information about crime but are not authorized to implement the law. As a result, they cannot make arrests or apprehend criminals. Expanding their operational scope requires a comprehensive rethinking of the legal and judicial framework, as it exists today.

Second, economic competition in law enforcement could compromise ethical standards employed by competitors. Because they are not bound by the legal framework, agencies can always play hard and fast with rules. As an example, employment screening and compliance with regulation might take a hit as incentives for rapid growth multiply for private contractors. Transportation startup Uber is a prime example of what happens when businesses cut corners for growth and play hard and fast with rules. A similar approach in law enforcement could have disastrous results for a community as well as society at large.

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Third, there is no guarantee that cases similar to Michael Brown or Eric Garner will not occur in communities protected by private agencies. By choice, communities belong to a similar socio-economic class and have a fairly homogenous composition, whether economically or socially. As such, they share common prejudices. The problem is exacerbated by the fact that a private security agency’s primary accountability lies to its customers – the community that hired it – rather than to a larger social justice system. As such, selective discrimination may increase rather than decrease. Remember, Trayvon Martin, the 17-year-old Florida teenager, was killed by a community patrolman and not by a law enforcement agency official.

Fourth (and this is related to the third reason), economics might interfere with the process of social justice in a society. This is because private contractors will allocate resources and capital for maximum gain and target middle class and rich neighborhoods for their customer list. Low income neighborhoods will be ignored or underserved by such agencies. As a result, they will end up with deficient or no crime prevention services and crime rates may increase in such neighborhoods and communities. Absence of the government’s invisible hand will ensure that the cycle becomes self-perpetuating, where high crime increase costs of maintaining a private security contractor in a given neighborhood and vice versa.

So, does this mean that providing economic competition to the police force is a bad idea?

Certainly not.

To further buttress the economic case, according to some estimates, approximately 85% of the nation’s critical infrastructure is protected by private agencies. Further, they have increasingly picked up the slack for law enforcement agencies post 9/11 after the former was burdened by Homeland security rules. The way forward lies in public-private partnerships. For example, consumer retail giant Target has two state-of-the-art forensics laboratories to protect its assets and employees that it shares with law enforcement agencies. These labs, located in Minnesota and Las Vegas, analyze data and evidence to help solve thefts, frauds, and violent crimes for over 125 law enforcement agencies.